5 Investing Choices for a Volatile Market
Try to avoid impulsive decisions governed by emotions and instead focus on investing strengths and weaknesses, changing opportunities and long-term goals.


A global recession seems to be looming over investors. According to a probability model run by The Conference Board in October 2022, there is a 96% likelihood of a recession in the U.S. within the next 12 months. Expectedly, investors are spooked, and rightly so: Interest rates have increased, down payments have disappeared, and retirement timelines have shifted. The markets are constantly changing and have proven to be unpredictable.
An unpredictable and unstable market can easily impact our emotional state and lead us to make rash decisions. These rash decisions are common. According to a study by MagnifyMoney, 66% of investors have made an impulsive or emotionally charged investing decision they later regretted. Even experienced investors with firm goals, focused exclusively on long-term growth, can become impulsive and reactionary when faced with changing variables like market movements, low company earnings and corporate actions.
This is not to say that we should exclusively do nothing during market volatility. Once we acknowledge that the impulse to sell right away during a downturn is governed by our emotions, we can begin to view market downturns as an opportunity to reflect on our strengths and weaknesses as investors, evaluate changing opportunities and double down on our long-term goals.
In my experience, there are five important investing choices investors can make during volatile times. Which of the following actions an investor should take depends entirely on their current portfolio, economic goals and lifestyle.

1. Investors Can Adjust Their Portfolio Targets.
This is a good fit for investors who, when going through a downturn, realized that their portfolio choices were riskier than they actually have appetite for. They can adjust their investment options to be more conservative, shift assets into high-yielding savings and checking accounts and/or pay down debt.
Higher-risk portfolios tend to be equity heavy, while a conservative approach may favor bonds. One could use the Modern Portfolio Theory as a benchmark when assessing risk and building out their portfolio.

2. Investors Can Invest More and Buy the Dip.
This is for the investor who is secure in their financial stability and recognizes the great buying opportunity available for them. These investors tend to park their cash in brokerage accounts, automating their contributions.
On M1, this looks like using auto-invest or Smart Transfers on a schedule that works for them. We see a range of recurring transfers weekly, biweekly, monthly and beyond.

3. Investors Can Take Advantage of the Dip by Moving Positions.
The strategy of “moving positions” is similar to buying the dip, but takes it one step further — by moving positions to be in stocks that will benefit once the market bounces back up. For example, an expensive stock that an investor might not usually be able to afford will become cheaper during the dip, allowing them to buy into something they wouldn’t be able to under normal circumstances.
This move should solely be done by an investor who has researched objective factors, analyzed risk and carefully weighed the pros and cons. Consider macro factors that may affect the new position, prior performance during downturns and industry benchmark.

4. Investors Can Cautiously Sell.
In most cases, this is the right move for a very small subsector of investors — those who believe the big dip is still coming and want to hold everything as cash or cash alternatives until the danger subsides and plan on re-entering once the markets have stabilized.
Selling, of course, could minimize your taxes at the end of the year if you sell at a loss and decrease your end-of-year tax burden. This will also release you from a potential loss in capital if you believe the price will decrease in the future and could minimize your capital loss overall.
However, when you sell your security, you will lose your proportionate share of ownership and the rights to any potential dividends or capital gains in the future.

5. Lastly, and Maybe Most Important, Investors Can Do Nothing.
This is for the investor who is confident that, despite any temporary volatility, their portfolio will stay the course. Oftentimes, this is a fit for an experienced investor who has weathered previous downturns, coming out the other side still standing.
The choices that investors make during periods of volatility are highly personal. It’s impossible to say that one investment move can work for everyone. However, decades of economic research show that investors shouldn’t base their decision to buy, sell or adjust their portfolio based on emotional reasoning.
The bottom line is to understand your options and do your own research. Long-term conviction will help you weather downturns, market corrections and the human side of you that just wants to react.
Often (and with hindsight’s benefit), small, thoughtful moves can pay dividends in the long run.
--
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Brian Barnes is the Founder & CEO of M1, a personal wealth-building platform that enables people to invest, borrow, spend, and save money easily and optimally using customization and personalization. Hundreds of thousands of people have entrusted M1 with over $5.5B of assets, and M1 has been recognized and featured in The Wall Street Journal, Barron’s, Money, Motley Fool, Investopedia, and Yahoo Finance.
-
How to Shop Smarter as Tariffs Drive Up Prices in 2025
Tariff fatigue is real. Here’s how to save as prices rise and uncertainty grows.
-
Retirement Reimagined: Finding Your Tribe in LGBTQ-Focused Communities
Demand for LGBTQ retirement communities in the U.S. is high, but inventory is not easy to find. Here are some safe havens to explore.
-
The $1 Million Retirement Question: Are You Being Tax-Smart About Your Pension?
A financial planner raises some key considerations for navigating retirement with a pension and recommends four strategies.
-
The Costly Mistake You Might Be Making With Your First 401(k)
Most people start contributing to their retirement savings later in life. That could be a big-time mistake, literally costing you thousands of dollars.
-
An Estate Planning Attorney's Guide to the Importance of POAs
Regularly updating your financial and health care power of attorney documents ensures they reflect your current intentions and circumstances. It's also important to clearly communicate your wishes to your chosen agents.
-
Divorce and Your Home: An Expert's Guide to Avoiding a Tax Bomb
Your home is probably your biggest asset, so if you're getting a divorce, the stakes are high. Keep it? Sell it? You need to have a good plan in place for how to handle it.
-
Fewer Agents, Fewer Audits: How IRS Staff Cuts Are Changing Enforcement
Significant reductions in the IRS workforce appear to be increasing the number of 'no change' audit closures. The shift could potentially increase the overall tax gap — the difference between taxes that should have been paid and those that were.
-
What if You Could Increase Your Retirement Income by 50% to 75%? Here's How
Combining IRA investments, lifetime income annuities and a HECM into one plan could significantly increase your retirement income and liquid savings compared to traditional planning.
-
Here's Why You Shouldn't Do an Estate Plan Without a Financial Planner
Estate planning isn't just about distributing assets. Working with a financial adviser can ensure you've considered the big picture — and the finer details.
-
Trump Tariffs and Taxes: Waiting to See What Happens Is Not a Strategy
Like presidents, tariffs come and go. Policy changes also shift about every two years with the election cycle. If you're paralyzed by uncertainty, you could be missing opportunities to benefit your financial future.